How Grandiose Motors Company Can Expand its Dealership Network - Case Study Example

Grandiose Motors Company Analytical Report xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Purchasing, supply chain and inventory management xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Student Number xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Institution xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date of Submission Contents The report has the following contents Introduction Structuring of purchasing and inventory functions Purchasing and inventory management policies and procedures The importance of supply-chain and inventory management concepts Conclusions Recommendations Introduction This is a report written to critically and analytically analyze how Grandiose Motors Company can expand its dealership network. The report aimed at making recommendations on the structure the company can adopt to ensure purchasing and inventory functions are well co-coordinated for smooth running. It further analyzed how the company’s four dealership facilities may have different policies and procedures in purchasing and inventory management. The last objective of the report was to discuss the significance of supply chain and inventory management concepts in contributing to the prosperity and sustainability of the company. Structuring of purchasing and inventory functions The structure of the purchasing functions design (Smeltzer 2000) will be based on the fact that this is a department that orders for new vehicles and all parts and services needed. It thereafter receives them after they are brought into the dealership premises and checks if they are of the right quality and the expected quantity as per the order. The structure should have three teams. The first one should be the ordering team. The group will place orders. This should be done at the right time with no delay to take care of consumers who might have ordered for some of the products and those who might come to buy without ordering. The team is also required to follow –out if the supplier deliver (Salonen 2004) the goods as per the agreed time. They will be responsible to re-order for more goods immediately the current stock has been sold or repair parts been used for replacements. The team should be able to predict future demands depending on the current orders and former orders. This means it should be analyzing the orders to see what consumers have been buying either on daily bases, regularly and irregularly. They should strategize on the best ways of ordering goods. Some of the orders may take long to be processed. This team should be aware. The other team is the provider management and investigation team. They are entitled to work closely with all suppliers (Choon 2000). It has to analyze all suppliers to know where to purchase all things they need. They have to get their certification programs, then evaluate, compare and contrast them. This can be done by having their contacts to always reach them when orders are being made. The team has the mandate for suppliers from all different parts of continent who can offer goods that can adapt to future technology changes. The current vehicle being sold may need some replacement components to correspond with changes in technology that change daily. At this point, the team should have some staff that are competent in engineering more so in mechanical and technical affairs. This team is also expected to ensure the protocols set to the suppliers are obeyed. This is to encourage the providers to supply goods at the right time in the right conditions without failure. In deed, if rules and conditions of supply are honored, the company will free themselves from straining (Ford 2003) in following the providers every other time. If they the providers don’t seem to follow them, they can adjust to other providers who are more effective; the team must come up with strategies of buying. Once are order is prepared, they will always need to acknowledge it and on delivery of the goods that have been ordered, they have to examine them to ensure they are the right ones. This team is expected to keep lists of prices that distinct providers are offering at different time. This will facilitate the purchases of products at the least price to cut down cost. They should keep on checking for any price changes. Once orders have be honored, the team should give are go ahead for payments to be made and make sure they are done. Any claims made by the suppliers should be listened to and be solved very fast for good relations between each other. The above teams should be supported by a person or few people to do commercial evaluation. This will negotiate with suppliers on their prices of the materials they provide to get the least price in order to reduce buying expenses. They can ask for discounts for different goods and over different periods of time. Inventory entails counting of all that has been bought by the company. It extends further to keeping of the materials that have been refined and the stock in stores or ware house. It also shows what has been sold or is to be dispatched at a certain stated time. The inventory management structure should plan specifying the various the goods to be ordered by the Motors Company (Price 1999). This should be done in relation to the requirements of the different vehicle the company is selling. This plan will help the company to know when deliveries are to be received and if there is enough space for their storage. This plan will in addition keep the company alert to order for products that are on demand and if their demand is low to order seasonally or in small quantities. The inventory structure should be made in such a way to ensure there will be right amount of stock in the company; the dispatch is done in the right time. The inventory should be monitored daily to ensure quality and right amount is available. This will be done manually by counting and re-counting. Inventory system software can be used to show all records and help in accurate calculations. Purchasing and inventory management policies and procedures These policies are made to put limits on the amount of parts the Grandiose Motors can buy at a given time and specify the provider who will supply. They state the protocols to be observed as purchasing are being done. These protocols help retaining in good relationship between the Motors Company and the suppliers. In deed, they help in ensuring consumer needs are met at the right time without failure. The inventory is supposed to take care of the stock. It will state the amount to be stored in the storage area, not to exceed a certain amount. It will help to guide the company to control its expenses (Ouchi 1979). The procedures also will differ in each Grandiose Motors dealership facility. This will be due to the following elaborated factors. There are will be four dealership facilities once the new auto supermarket is established. All the procedure and policies used for the purchasing will depend on the type of vehicles each facility is handling. Some will have one or two types of vehicles whereas others will have many especially the auto supermarket. This means that the facility with many vehicles will require many and various parts for the vehicles. It will be noted that many suppliers will be approached to compare and contrast their various selling prices for their goods. This will in fact call for many procedures to be followed when purchasing and the policies should be strict to facilitate quick order placing and delivery services by the providers. On the same note, the inventory for the large dealership facility will be complicated. It will have so many procedures which may not be handled well by unqualified personnel. The procedure need to clearly identify how parts brought in should be stored. The parts that have been refined should be kept in a certain storage area and dispatch process should be stated how it will be done on daily, weekly and monthly basis. Each procedure has to be dependent of another, where the amount of the stock that is delivered from providers might dictate the amount to be sold or shipped to a given area or to a certain consumer. The dealership facility’s policies are also to be strict and clear to ensure the staff in charge observes them keenly. For a dealership that is small, for instance, one that has one or few number of vehicles, they will be very simple and they can easily be done by few personnel. Location of the facilities will also determine the procedures and policies that facility follows. This is due to the number of consumers who will be found within that locality. If they are few, it will be automatic that the things to be bought are few and the procedure will be simple. This will be also the case as far as the policies are concerned. For many consumers, like if the are million customers buying vehicles, this will call for more parts and after sales services. The policies and procedure used will be set to suit for the demand by both the facility and consumers. The location will be a determinant of the number of suppliers who will be found within that specified area. Around some of the facilities, there may be many providers from the neighbored or from far distances. The one that are near can easily be reached to in times of need. If all parts and services can be provided by them, then it would mean parts can be bought in smaller quantities unlike the place where they are far away to reach them. Those who are far away from the facilities will demand that procedures will be long to give enough time for the parts to be bought and be delivered to the facilities. In short they will be complicated. On the other hand, the policies will be stricter to those that are farer as compared to those near even though they have to be honor for the success of every facility. The nature of the landscape and the roads in the area where each facility is located will dictate the number of spare parts and all the components each consumer will need. If the area is hilly, sloppy and has no tarmac roads, the vehicles used must be very strong and replacements may be done often frequently thus demand rises. This will dictate that buying of these parts from providers is almost constant and at a higher level. This thus results into many transactions being done regularly; demanding for policies that are strict and many procedures in purchasing and stock keeping. The number of staff working in each facility can dictate the procedures to be undertaken. In case where they are few, the procedures will be less as compared to where they are many. This will be done to ensure all duties that are to be done are attended to at the right time. Their competence will facilitate the use of short procedure and few policies which are easy to understand will be used in the buying and inventory keeping. The importance of supply-chain and inventory management concepts These are the facts that will help in the running of the Grandiose Motors Company and contribute the achievement of all set goals at specified period of time. The supply chain will enable the company to look for the suppliers who will provide goods that are needed by it. The suppliers will state the prices they will be selling their goods against the quality and quantity. The company will therefore select the best suppliers who will charge low price and provide the best quality. To add on, they will negotiate on prices and see if they can make some reductions to enable them lower their buying expenses and offer affordable prices to the customers thus retaining the customers and attract some more. The new customers will enable the company make great number of sales hence high profit which can help them increase the number of vehicle they are selling or even other dealership facilities. When the company is operating with reduced selling prices, the self-service in the auto supermarket runs effectively since it would need sales representatives to carry market promotions and a lot of advertisements in the media for the already established customers can tell other people about their affordable prices. Supply-chain will define the follow of all parts and components from producer to wholesaler, and then to retailer or consumer if it is not done indirectly where retailer is not needed (Mentzer 2000). If the supply has to be done directly from one motors facility to consumer, then the concepts will be very distinct as compared to a long supply chain (Sheth 1997) where retailer is needed. A direct supply will aid in price lessening. Inventory management concepts have many benefits. To start with, it ensures that that stock keeping is maintained at a certain fixed amount as per the needs of each facility. If inventory is well managed, there will be no under-stocking of parts, products that are needed. This helps the company to supply the required products to consumers at the right time with no delay. If delays are not experienced, this will give customers the confidence to trust Grandiose Motors Company. Overstocking is also minimized; hence there will creation of enough space for all stock. Maintaining a limited amount of stock will save the company incurring large amount of storage expenses on rent and employing many personnel to run and manage the storage place. Keeping the right amount of stock will ensure no parts or anything is lost from the storage area without noticing for the number is a bit smaller and one can be in a position to count easily. On top of this, when stock number is minimized, cases of theft are easily detected and therefore any unfaithful workers (Ring 1992) in the Grandiose Motors Company may be afraid to steal not to be realized. This will save the company from investigating such cases or losing stock through theft. In fact, the time that the stock stays in the company is also limited. This will in fact ensure no damage is done due to overstocking. The parts that are sold to customers or used for after sales service will always be up to date hence of the right standards to meet buyers’ needs in accordance to the current technology. The company will be in a position to know its value with the help of the good inventory management concepts. It is through the use of the inventory that the company will know the parts, products that are highly needed in the future and be able to plan on how to purchase them. By knowing their worth if anything happens like fire outbreak or theft, the Motors Company can stand and claim for compensation (Usher 2004). They can be precise due to consistent inventory management. Re-ordering of parts that are on demand is made easy. This is because the staff will check the amount of parts that are remaining in the stock and the rate at which they are being sold and the know when to purchase some more. The prosperity of the company is also determined by the inventory. Conclusion Basically, Grandiose Motor’s purchasing unit (Smeltzer 2002) and inventory management will affect the company’s success. Their roles dictate the amount of stock that will be order, processed and send to consumers. To be specific, the Grandiose Motors dealership has many costumers and expects to get a greater number due to the new opening of an auto supermarket which is capable of displaying a variety of vehicles at a specific price. Consumers will make a choice of the type of vehicle they want at different times. Due to wear and tear, some will need some after sales services and spare parts once a need arises. The purchasing and inventory structure should be done in an appropriate way to meet all expectations needed. Recommendations It was found that Grandiose Motors Company could succeed if the above discussed suggestions were put into consideration. This demanded that all the staff and workers in the four facilities to co-operate and work hard. They should relate well with all the clients and suppliers. It was observed that the company cannot succeed if they don’t have a good structure of the purchase and inventory. Improper management of the two structures would cause delay in sales, and failure to meet consumer demands. It would cause over-stocking or under-stocking. This would eventually cause the company to collapse and close some of the dealership facilities. References Ouchi, W, 1979, A conceptual framework for the design of organizational control mechanisms, Management Science, Vol, 25, No, 9, p. 833-848. Choon, T, 2000, Supply Chain Management and Its Impact on Purchasing, Journal of Supply Chain Management, http, //www,allbusiness,com/accounting/budget/676989-1,html. Ford, D, et al, 2003, Managing business relationships, Chichester, John Wiley & Sons. Usher, N, 2004, Outsource or in-house facilities management, The pros and cons, Journal of Facilities Management, Vol 2, p, 351-359. Sheth, J, and Sharma, A ,1997, Supplier relationships--Emerging issues and challenges, Industrial Marketing Management, Vol 26, p, 91-100. Ring, P, and van de Ven, A, 1992, Structuring cooperative relationships, Strategic Management Journal, Vol 13, p, 483-498. Mentzer, J, et al, 2000, The nature of interfirm partnering in supply chain management, Journal of Retailing, Vol 76, p, 549-568. Price, I, and Akhlaghi, F, 1999, New patterns in facilities management, Industry best practice and new organisational theory, Facilities, Vol 17, p, 159-166. Salonen, A, 2004, Managing outsourced support services, Observations from case study, Facilities, Vol 22, p, 317-322. Smeltzer, L and Ogden, J, 2002, Purchasing professionals' perceived differences between purchasing materials and purchasing services, Journal of Supply Chain Management, Vol 38, p, 54-70. Read More